CEO Leadership...
Can Hospitals Remain Independent by Forming Coalitions?
By Barbara Carey and Mike McCall
TCI participated in the Delta Region Community Health Systems (DRCHS) Development Conference in Memphis last week. It was extremely well organized and useful. Barbara Carey gave a presentation on Winning the Hearts and Minds of Your Community, winning loyalty, investment and engagement in your hospital. Moving from healthcare provider to an integral part of people’s lives and the community is a focus of this program.
We attended a panel discussion on coalitions that are active in three states – Louisiana, Arkansas and Illinois. These coalitions are attempting to provide a system approach to healthcare replicating the resources available to large hospitals and enabling independence. This approach is an intriguing solution which offers another option along with partnering, affiliations, managing and merging with a larger hospital system.
What do these coalitions offer?
Each coalition is operating under their own principles, but these are some benefits that were discussed.
Increase in margins with group purchasing power, particularly with pharmacy items. Margins are so thin in stand-alone hospitals, and they have no bargaining power with suppliers. A group buying coalition through a service agreement gives independent hospitals discounts that go to the bottom line. All hospitals in these coalitions are not required to participate but they can.
Medicare Advantage plan issues are discussed, and common solutions are sought. Medicare Advantage plans according to Brock Slabach from the National Rural Health Association have gained a 50% market share of the Medicare market. This fact creates issues for hospitals in terms of high denial rates and delayed payments. The denial rate of 13% was cited by Brock Slabach and these are final denials. No one knows what the initial denial rate really is because systems are having to submit to insurers multiple times to overcome denials. The administrative cost of Medicare Advantage plans is soaring according to participants in this conference. Coalitions are helping their members grapple with this issue. In addition, Medicaid Advantage plans are also becoming strong in the marketplace, and they bring similar administrative issues.
Attracting specialists is doable within some hospital coalitions sharing costs. One hospital discussed successfully recruiting a pulmonologist using a coalition and another gained the services of a general surgeon. Coalitions are able to also attract the services of larger physician groups to provide even more specialty services. Beyond physicians, one hospital coalition member was able to share the salary of a community health worker with another coalition member. Coalitions seem to go beyond the power of simple partnerships, and they function beyond the scope of services of normal hospital associations.
Sharing quality data to work on improving specific service areas and operations was cited by one group as an advantage. Of course, trust had to be established before such a step could be taken but think of the advantages of access to big data like the large databases of multi-hospital systems. There is enormous potential in establishing that resource.
Discussing EHR options seems to also be a benefit. No hospital discussed being able to afford EPIC but they shared their knowledge of alternate systems and offered practical advice to those facing a “buy” decision on a new system, saving the hospital time and avoiding mistakes.
Community Engagement Strategies are shared in some coalitions. Outreach to law enforcement, the judiciary and educational institutions as well as leaders in the community is a successful strategy. TCI has always advocated for this approach, and we have consulted with hospitals to walk them through the process. The result is that the hospital becomes the epicenter of the community not just a healthcare provider option and the community develops an “ownership mentality.” Trust and ownership are really important and lead to loyalty and increased use of hospital services, as well as, building the hospital’s brand by “word of mouth.”
These are some of the benefits that we learned at the DRCHS conference. We were intrigued by these three coalitions, and we admire the organization and governance hurdles that they overcame just to exist.
TCI would like to hear if you are participating in a hospital coalition and what benefits you are deriving from that participation. Please take a minute and send an email to barbara@tciconsults.com if you are participating in a coalition.
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